The price-to-earnings ratio (p/e ratio) is a financial metric used to evaluate a company's relative value by comparing its current share price to its earnings per share (EPS). This ratio helps investors understand how much they are willing to pay for each dollar of earnings, providing insights into the market's expectations for future growth. A higher p/e ratio may indicate that investors expect strong growth, while a lower ratio could suggest the opposite or reflect company-specific risks.
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